Most private lenders will not consider a borrower’s primary residence, or a vacation home, as collateral for a private mortgage. If a borrower has a 4-unit residential property and lives in one of the units, this is still considered as owner-occupied, and private lenders won’t touch it. The main reason is government regulations. Private lending is really just for investment real estate.

There are some exceptions, and there are also some alternatives to getting a home loan from a bank. For private lenders, the purpose of the loan is more important than the occupancy. If a borrower owns a business and needs to take equity out of their primary residence to use for the business, there are some private lending companies on our platform that will provide a loan in this situation, if the property is in California. Another scenario acceptable to some California private lenders is if the loan proceeds are used to purchase an investment property. Some private lenders offer “residential bridge loans” which is used if a borrower is purchasing a new primary residence and needs to use the equity from their current home which will be sold shortly after the closing of the new home. The loan term for this situation is typically 11 months.

We have only one lender on our platform that offers consumer-purpose owner-occupied private money loans, but only in California: Pacific Private Money.

If you are having trouble qualifying for a mortgage from a bank or institutional lender, we have a few companies on our platform that offer “non-prime” mortgages which is slightly more expensive than a bank, but they can accommodate borrower with lower credit and challenged financials. Nationwide Mortgage is a good option for loans in CA, FL, OR, VA, CO, WA. Citadel Servicing Corporation offers non-prime mortgages in many states.